tv Nightly Business Report PBS January 25, 2013 7:00pm-7:30pm PST
eighth day in a row. suzanne pratt takes a closer look a what's behind the recent rally in stocks. >> reporter: as months go, january is typically a good one for the stock market. this january, however, is the best investors have seen in years. so far, the dow is up 6%, the s&p 500 has gained more 5% and the nasdaq is up 4.3%. and, if it weren't investors slicing up apple, the nasdaq and s&p 500 would be even better. veteran trader doreen mogavero says people are buying stocks simply because they need income and they're fearful of bonds. >> i think people want to take their money out of the bond market and put it back into an undervalued asset class which equities seem to be at this time. so, i think there's an asset allocation process, a reallocation process going one from bonds into equities. >> reporter: the stock market may also be getting a lift from the new spirit of cooperation among lawmakers in washington. on top of that corporate profits, so far are not as bad
as many had feared and in some cases a lot better. take procter & gamble, which today released results that soared past expectations. the company also boosted its outlook for sales and profits. >> it's more about the outlook for rest of 2013 than it is for the actual results that we've been seeing so far. and, that is an important distinction because we'll have to see if things really come in the way these companies are expecting. >> reporter: after the recent run-up in prices, some market pros say the stock market is looking ripe for a correction. still, many agree the risk is more to the upside than the downside. >> i don't think that people have been overly optimistic on the economy. and, we've seen autos really rebounding over the last year. we're really starting to see improvement in the housing market. so, i think those are some very fundamental pieces of the economy that could really lead to some stronger growth in the future. >> reporter: as for retail investors rediscovering stocks this january, not everyone
thinks the reunion is for real. some experts say the market will have to rally a lot longer before that happens. suzanne pratt, "n.b.r.," new york. >> susie: from a smartphone in your hand to a smartphone in your glasses, still ahead, the latest fashion trend: wearable technology. exxon-mobil is back on top. it's reclaimed the coveted title as the world's most valuable company. apple now slips to number two. exxon is worth an estimated $417 billion and apple is $4 billion less. since apple hit $700 a share in september. it has lost roughly $250 billion in value. the change comes exactly one year after the tech titan knocked the oil giant out of the top spot. shares of microsoft ended flat today, after posting quarterly results last night that topped forecasts. the once undisputed king of tech has seen its marketshare eroded by the likes of apple and
google. but, as ruben ramirez reports, microsoft may be gearing up for a makeover. >> reporter: microsoft may be best known for it's windows operating system but word that it could sink about $3 billion into dell may give investors a clue about what it sees in its future. >> similar to dell, microsoft really is a company that is strapped for growth right now so access to a potentially new growth avenue could be beneficial for microsoft. >> reporter: one growth area is the consumer space. microsoft launched the surface tablet this past fall-- it's first foray into the hardware space. >> people like to do everything on something that is light and portable and fast and they want to do more and more and more. >> reporter: analysts say the surface has been slow to gain traction with consumers, partly because of its higher price point, but come february its expected to launch a business version of the surface, pushing deeper into the enterprise space as everyone from consumers to business users say goodbye to the desktop computer.
>> for the first time in 11 years the p.c. market declined in 2012 as more and more people move to tablets like the surface and other mobile devices. industry watchers say a deal with dell could help the software giant move deeper into the consumer market. >> reporter: and, don't forget mobile it's an area where both microsoft and dell are lacking. >> we believe microsoft right now is trying to form themselves into more of an apple or google per se where they are looking to move into that mobile area and not just doing it on the software end but on the hardware end as well. >> reporter: zino says shares of microsoft, which have been flat over the last decade, could get a boost if investors see the company make a big play for the mobile space. as for dell, analysts say the cash infusion could help its founder michael dell take the computer maker private and help shift the firm's focus. >> dell knows that personal computing is heading toward the tablet form. microsoft knows this as well.
so this could be a very natural pairing for them. >> reporter: but a pairing could ruffle more feathers between microsoft and its other computer maker partners. still, analysts say even if microsoft decides against investing in dell, the software giant, which is now sitting on more than $68 billion in cash will have to spend some of that money soon. ruben ramirez, "n.b.r.," new york.
>> susie: our market monitor tonight is bullish on the stock market and says there are many choices for investors to pick up cheap stocks. he's john rogers, founder and chief investment officer of ariel investments and its flagship ariel mutual fund has tripled in value since march 2009. john, this is the first time you are our market monitor, so welcome to "nightly business report." let me begin by asking you, here we've got the stock market at these new levels. why do you think this momentum is going to continue? >> well, as we talked to companies all around the country, we continue to hear that, you know, we're only in the fourth or fifth inning of this recovery. we have a long, long way to go. we're going to have earnings and profitability will be higher as we move into 2013 and 2014. there's so much cash around that people can buy back stock and that's going to help earnings. so we're extraordinarily bullish today. >> susie: what about individual investors? as you know well, they have been very fearful of investing in stocks. is it too late for the individual to get in at this point? >> i don't think so.
p.e. multiples are stillest. thes & p, around 13 times. i think people have been too cautious for too long. people have been putting money into bond funds and trying to be risk averse, but i think as people realize, the bond market's not going to be the place to be. equities are going to be a terrific place. so not too late. it's a great time to jump in. >> susie: all right, you've brought with you some stocks that you're recommending for those individual investors to consider. let's go down your list. you have gannett at the top of your list. ticker symbol gci, trading here at the big board. what does nanet have going for it, considering that newspapers are really struggling these days? >> well, i agree, it's been a tough place to be for a number of years. except gannett has really focused on local conten concontent in small towns throughout the united states. it's well known in "usa today" and sometimes people forget
about their local communities. if you think about it, local communities can't get their news through the internet. they're not going to be able to find out what's happening in their local communities except going to their local newspapers. we think that's very powerful. also, they have extra assets. they own career builder, the majority owner of career builder, other terrific internet assets and they also own local broadcasting television stations that have condition exceedingly well. >> susie: okay. well, speaking-- >> we really do love gannett. >> susie: oh, okay. speak of television station, you have another media company on your list, cbs, a very familiar name to all of our viewers. what's the attraction of cbs at $42 a share? >> well, cbs has great content. which is really important. and, you know, you think about "c.s.i." "the lucy shoz, their great sports programming. so they're able to monetize all those great great assets and they also have other nonstrategic assets they've been able to jettison. they're in the process of
getting their outdoor advertising, and they're selling their international assets there. there's real value to be created by their strategic vision. >> susie: switching out of media and into the housing sector, you're recommending first american financial, ticker symbol f.a.f., here at the new york stock exchange. tell bus this one. >> theatre second leading provider of title insurance in the united states. and every time there's a transaction in housing, they benefit because title insurance is valuable and important. and we often believe that warren buffet is right. the housing recovery of going to come back and be more powerful than people expected and f.a.f. has been a great winner for us as that started to happen. >> susie: moving along, you have a stock you're recommending that's a health care, hospera, a leading player in generic injectable drugs. it's trading at $35 and as you can see on the chart, a big move since november. why are you recommending h.s.p.? >> we think the stock's
extraordinarily cheap when you look at the long-term opportunities they have in health care. we think that they also are very big in biosimilars and some of the hot technology out there. the stock has been undervalued and under pressure. they've had f.d.a. problems in some of their plant, especially their rocky mountain plant. we know over time, they're doing all the right things to fix those problems and the profitability will grow tremendously once they get that behind them. >> susie: just to wrap up, you told me ariel focuses on stocks for the long term. and in fact, the logo for ariel say turtle, slow and steady, you said. so these stocks that you're talking about today, are these buy and hold and for how long? >> we think we can own these companies for 10 years or more. we have a lot of stocks in our portfolio that we've owned for over 20 years. un, our firm is 30 years old now. and we really do believe you find a great business, you want to own it for the long run, and 10 years is the kind of goal we have for the companies we invest
in. >> susie: all right, well, good stuff. any disclosures to make in terms of any of these stocks that you've recommended? >> these are all large positions for us. favored positions in companies we've owned for the long run and continue to want to own into the future. >> susie: all right, well we look forward to having you back as a market monitor. thank you so much. our market monitor tonight, john rogers of ariel investments. >> susie: the market for new home sales tumbled in december. the commerce department reports sales fell just over 7% to a seasonally adjusted rate of
369,000 units. the sales pace was expected to be much higher. the supply of new homes on the market was also up. but housing stocks still rallied. as you see, pulte homes, rising 3%, toll brothers and lennar rose about 2% on average. even that disappointing news on the housing front couldn't keep buyers away. so far, stocks have been up every week this year. much of the gains today were thanks to better than expected earnings news. looking at today's volume levels about 700 million shares traded here at the big board. over at nasdaq, roughly two billion shares. for the week, the dow climbed nearly 2%. more modest gains at the nasdaq, due to heavy selling in apple. and the s&p 500 advanced just over 1%. let's get right to the big name stocks reporting earnings today that drove up the markets. no surprise that procter and gamble was the biggest gainer in the dow and s&p, as suzanne
mentioned earlier, the company reported a big jump in earnings and raised its outlook for future quarters. shares surged more than 4% to $75. rival kimberly-clark also announced better than expected earnings. the kleenex tissue maker cut costs and stepped up its marketing efforts. the company expects business in emerging markets to drive future growth. but the shares fell slightly to $86. honeywell posted fourth-quarter earnings just above wall street's estimates. the company has been able to boost profit margins despite weak sales growth. honeywell's stock rose a bit to just over $68. but they're still up 17% in the past year. halliburton shares jumped 5%, making it among the best performers in the s&p 500. the company reported earnings that beat analysts' expectations, thanks to improving international markets. the stock closed at $39.72. that's a gain of almost 50% since june. shares of heavy duty vehicle maker oshkosh skyrocketed more than 18%.
after the firm reported an unexpected jump in first quarter earnings. higher sales of fire trucks helped make up for slowing sales of military vehicles. shares of netflix streamed higher for a second day. the shares rose another 15%. today on top of a 42% boost yesterday. earlier this week, netflix shocked investors street with a surprise profit in its fourth quarter. there was also a pop in wall street's newest stock: bright horizons. it's a child care services provider it went public today and its shares jumped more than 28%, closing at $28.32. the company plans to use the proceeds to pay down debt. >> i think we'll be able to fuel expansion, generate a little big more cash. so we can essentially extend our mission further. not only here in the united states, but around the world. >> susie: starbucks got a jolt, with shares rising more than $2
to $56.81 or a gain of 4%. investors snapped up the stock in reaction to strong earnings news yesterday and quarterly sales surging to record levels. shares of hasbro were under pressure, after the toymaker warned 2013 earnings will come in below analysts' expectations, because of disappointing holiday results. hasbro is also cutting 10% of its workforce. that comment pushed shares of hasbro down 3% to $37. rivals mattel, leapfrog and jakks pacific all fell as well today. now on to some corporate dealmaking. a.t.&t. has agreed to buy some spectrum from rival verizon wireless. we're talking about the radio waves that transmit cell phone calls and data. at&t plans to pay nearly $2 billion for those licenses. both a.t.t. and verizon rose slightly today. meanwhile, software firm compuware has rejected a takeover bid from elliott management. compuware's board says the $11 a share offer significantly undervalues the company.
system from collapse, rewriting >> susie: saving the financial system from collapse, rewriting the rules for wall street and bailing out the auto industry. those are just some of the problems that confronted timothy geithner in his four years as treasury secretary. geithner officially stepped down today ending a history making run that began at the height of the greatest meltdown of the banking sector since the great depression. critics on the left say he bailed out wall street. on the right, they charge he burdened the country with a wave of red tape. in public geithner was a voice for moderation and calm, despite his private views that reckless bankers did great damage to the nation. geithner now says he plans to take some time off to be with his wife and family. as for his potential replacement, jacob "jack" lew, former fed vice chairman alan blinder says he's the right man right now. our next guest has worked with both geithner and lew. he's jared bernstein, senior fellow at the center on budget and policy priorities and former chief economist to vice president joe biden. jared, thanks for coming on the program. you know, as i just mentioned there, there are a lot of people who have different views on timothy geithner. some people say he was too easy
on wall street. he wasn't tough enough on the banks. when the history book books are written, what do you think they're going to say about timothy geithner? >> well, look, it's often the case when you have people attacking from the left and right that you may have found a sweet spot in the middle. and i think the story is kind of one that's in the middle. i think when the history books are written, they're going to look at the measures that secretary geithner preside over as critical to inflating the financial sector when it was really poised to take down not just our economy but global economies. if you actually look at the money expended to do so it came in far, far less than originally projected. geithner managed to replate the system on the cheap. the housing market is now finally crawling off the bottom. but it's getting better. but it took a very long time. and also, financial reform still needs to be implemented. >> susie: now, a lot of people are looking forward, looking to
the new nominee, jacob "jack" lew. we've got to get used to saying that name. he knows so much about the budget, and a lot of people are wondering is this a signal from president obama that he's going to take a hard line on these budget and deficit talks by choosing a man like jack lew. what do you think? >> i think it is. i think one of the key aspects of the second-term agenda regarding the economy and fiscal policy is to achieve a stable debt situation by the time the administration is heading out of town. and interestingly, based on some spending cuts and tax increases that have been implemented so far, we're pretty close. and jack lew intimately knows what it takes to get from here to there. now, i think you, also, to, about other issues of the treasury's beat, international currency, financial markets, implementing the dodd-frank issue. as i mentioned, financial reform
is still incomplete. so jack lew is going to have to oversee those as well. >> susie: let me get back to the budget issue. jack lew was also the architect of this sequester mechanism. a lot of people are worried if that kicks in, the automatic spending cuts, that, you know, that would really be a bad thing for the economy. some democrats are surprisingly saying maybe that's a good way to handle this whole budget cuts. where do you think jack lew stands on that? and, unfortunately, we just have half a minute left. what do you think? >> well, i think jack recognizes that if the sequester kicks in, it does two things. one, it makes deficit savings a lot more pronounced. that's $85 billion in one year. but, two thurts an economic recovery that's already too fragile. we certainly don't want to see that $85 billion extracted from the economy in 2013 all at once. >> susie: all right, jared, thanks a lot for your analysis, really appreciate it. thanks for coming on the program. jared bernstein for the center on budget and policy
priorities. >> my pleasure. next week on n.b.r., we'll find out what the federal reserve policymakers are thinking. ben bernanke and the open market committee hold a two-day meeting, starting tuesday, bernanke meets the press wednesday to answer questions about fed policy. and monday, n.b.r.-u heads to philly. we talk stocks for the long run with wharton professor jeremy siegel. ahead of that, you can read professor siegel's latest market thoughts on nbr.com. just look for the n.b.r.-u tab. you've heard of google glasses and gloves with handwarmers, but technology is about to take fashion to the next level. gregg greenberg from "the street" reports. >> reporter: computer geek rarely hooks up with runway chic. but the latest buzz in the fashion industry, wearable technology, could change that. and wall street is taking notice of what's currently a billion dollar industry and could soon rock the retail world. >> longer term there is no reason by the end of the decade
it's not tens of billions of dollars and eventually hundreds of billions of dollars because you are talking watches, bracelets, glasses, clothing and lot of things you can't even think about today. >> reporter: white believes the big winners-- at least in the short term-- will be apple, google, microsoft and samsung. and what will start with wired watches and glasses will eventually blossom into a world wide web of t-shirts, blouses and sweaters. >> it depends on how thin and light you want to make this. companies like i.b.m. are working on some flexible substrates that will really allow for the creation of wearable electronics. clothing. >> reporter: that's not all i.b.m. is working on. futurist trevor davis says the tech giant now has software that taps into social networks and predicts what people will wear. but does this mean style-setter anna wintour will be replaced by a supercomputer? >> i don't think anna wintour is out of a job too quickly. there's always going to be room for art and some intuition here. but what we can do with our
software is take the delay out of it. >> reporter: the fashion craze i.b.m. sees coming in 2013: steampunk. >> it's a retro-futuristic look. it's victorian high fashion meets industrial workwear. it's an obsession with things like brass. it's an obsession with things like cogs and gears. >> reporter: steampunk is still a bit too hip for me. i can't even choose a tie to match my shirt. luckily, there's a new technology for that. and it may change the future of retail. all right, linda, i want to try on a tie. this one's nice. and i like this one. yes. yes. there's a winner. >> reporter: linda smith's company facecake enables shoppers to virtually try on anything in the store or, coming soon, the privacy of your own home. >> from a wedding dress to holding a handbag to necklaces to make up and across platforms
as well. from mobile tablet online. and with swivel interacting with kinect for a 3d effect for your virtual try-on. >> reporter: facecake's launched its latest product at bloomingdales. and i.b.m.'s davis says retailers like bloomies will be big business for big blue once nerds start stocking their shelves. >> geeks and nerds have always created fashion. a lot of the top designers have looked at street fashion and started from there. >> reporter: gregg greenberg, "the street," for "n.b.r." >> susie: that's "nightly business report" for friday, january 25. have a great weekend everyone. we'll see you online at nbr.com and back here monday night. captioning sponsored by wpbt
his take on what's working and what's not. >> we seem to think that education's a thing, like a vaccine that can be designed from afar and simply injected into our children. >> the embattled oakland police department brings on an expensive consultant, but his tough tactics are generating controversy. >> i vote against this contract tonight is not about not being serious about crime. >> apple stock takes a plunge. it's something taking a bite out of innovation at the silicon valley giant. plus. i'm here at the new sfja strzz center in san francisco. we'll go on a behind the scenes tour to find out what makes this place so groundbreaking. coming up.